Whether a retail store owner opts for a long- or short-term lease depends on the type of business they plan to run, and how they expect it to grow. Short-term leases are more desirable for store owners who want some flexibility to deal with market conditions, or test a new idea. Long-term leases, on the other hand, are more appealing propositions for owners looking to ensure predictable locations and rental rates over an extended period.

Business Needs

Short-term leases provide an opportunity for businesses looking to test new markets or retail concepts, "The Wall Street Journal" reported in August 2010. Terms for these establishments, nicknamed "pop-up stores," typically run from mere weeks to months. West Coast-based bedding company Keetsa Mattresses Inc. used this rationale to gain a foothold in New York City, where it signed a one-year lease. The deal enabled Keetsa to recoup its investment quickly, and also generated much-needed rental income for the property owners.

Moving Costs

The cost of moving a business plays an important role in choosing short- or long-term leases, according to an analysis by Seecon Management, a property-management company based in California. For example, heavy equipment is often too costly to move, so a manufacturer will prefer a long-term lease to lock favorable rates into their agreement. Short-term leases, on the other hand, are more attractive to business owners who can move easily, and want to take advantage of changing market conditions.

Security Concerns

Lack of security is one major downside of short-term leases, particularly if the business owner finds a favorable location that he cannot keep. Phaidon Press encountered this situation after negotiating month-to-month leases for its London and New York storefronts, "The Wall Street Journal" reported. Despite posting favorable results at its New York Store, Phaidon's landlord asked the publisher to move out. The landlord then offered a long-term lease with higher rent to a new tenant. Phaidon eventually signed a two-year lease on another property.

Stable Locations

One of the most important benefits of signing a long-term lease is the chance to secure an affordable, stable location over an extended time period, "TransWorld Business" reported in March 2010. Landlords are often more willing to make concessions to longer-term tenants. The length will depend on the business owner's long-term growth strategy, and justification for any moving and downtime costs. The ability to negotiate specific options in renewing an existing lease, or seeking a new one, is an equally important consideration.

About the Author

Ralph Heibutzki's articles have appeared in the "All Music Guide," "Goldmine," "Guitar Player" and "Vintage Guitar." He is also the author of "Unfinished Business: The Life & Times Of Danny Gatton," and holds a journalism degree from Michigan State University.